Repair Your Bad Credits

Unsecured loans are popular among the crowd of Britain, and this topic has been already covered under earlier blog posts.  Requesting such loans on an online platform may be a state of confusion as, generally buying loans online can be risky. You may get rejected based on the credit score you possess. Credit scores are the only facts that represent your personality and identify you as a non-culprit, honest person. Banks clearly reject the requests if the person is found to have even a slight bad score. P2P lenders take a keen notice on the credit scores and choose their borrowers.

The reason behind your bad credit reports can be both - a mistake in the entry and/or the past unclear debts in your name. You can certainly repair your record mistakes by proving your clean past records, testimonials from your earlier lenders stating your complete re-payments before the credit bureaus. Else such bad situations leave you with only one good choice. It is better that you choose to repair your credit scores and clear your debts. In case you are the real culprit, you need to make a quick re-payment to all those who have been left unattended on your account.



In case you own a Credit card, it is necessary that you utilise the credits safely. Prefer to stick to the below points in order to maintain good credit ratings.


 - Never carry a balance on credit cards (or secured cards) for top credit scores.
 - Pay in full each month (replace the money).
 - 0% or 99% does not matter when it comes to credit ratings.
 - I know the temptation is there to carry balances with 0%. Don't do it.
 - Consider it one of the best tricks by scam banks to get you in debt.
 - If you pay in full each month you also avoid interest.
 - Use the card for things you need like gas or food and pay in full each month for amazing credit. No games.

Some relevant articles prevail at suggesting best possible steps at getting a repaired credit score. Go through the link here: http://person-2-person-loan.blogspot.com/2011/12/renew-your-bad-credit.html

Side Effects of Bad Credits

Spending out enormously through credit cards and ignoring the bills and repayments, you are liable to register a bad credit score. The bad credit score is sure to land you up in a bad situation when you apply for loans. The level of debts has a negative impact on your credit scores. The credit score is a analogous factor to check a person’s reliability.  Thus, a record of bad credit score can make it difficult for you to buy a home or difficult to get you a job or a loan request. A bad credit score can have certain side effects as below:

High rates of interests:

Creditors or lenders see a huge risk while lending bad creditors as compared to their better credit counterparts. They make you pay for this risk at higher rates of interest. And over the time that you end up paying their interest, you find yourself paying more in interest rather than what you could pay for a better credit.

Credit and loan applications may be declined:

May it be the payday loans, unsecured P2P loans, or through financial institutions, bad credit score loan requests can be declined as no lender would offer to pay at such a risk.

Difficulty getting an approved apartment:

And yes, the landlords seem to be more alert on choosing their tenants. They do check the credit scores to ensure their property safety and subside high risk on renting.

Difficulty in other things:

May it be buying a car, starting up your own business, and now even the phone companies tend to check your credit scores.

Bad credit scores should thus be renewed /removed or corrected in order to ensure your safety and help in smooth money transfer in future. 

Unsecured Loans Over Secured Loans

Secured loans are those that require collaterals. A borrower is supposed to present a valuable asset or property against which the loan is sanctioned for a certain period of time. The loan thus received is marked under higher rates of interest. Unsecured loan in turn are conventional in nature. The borrower does not require any collateral. Secured loans however, are marked under certain limit and those with no property to secure, cannot apply for the loan.

Unsecured loans are free for all. Such loans do not require any collateral to be submitted as secure property nor do the rates of interest rise higher. Unsecured loans are in fact quite a better option for those who need the loan urgently. Secured loans take a long, time consuming process.

Some people who are applying for a secured loan think that when they have offered their home as collateral, they have to vacate it, which is entirely false.  A borrower will still live in his or her home and will never be asked to leave, unless he or she fails to pay the monthly repayments.

As for the unsecured loans, some individuals think that their properties cannot be touched by loan providers in case of failure to pay because they presented no collateral.  This stands true unless the borrower defaults, the lender has to search for various ways to recuperate their loss by taking possession on some of their properties. Lenders in turn often find it risky and difficult to choose unsecured lending as an option. But for them, there are some financial sites, that play a role of the mediator and serve a common platform to the lenders and borrowers, where they can lend and borrow. The platform acts as a third party agency that takes care of the issues raised in case of defaults by the borrowers. P2P lending chooses to offer unsecured lending and borrowing. 

Is India ready for p2p lending?

The latest buzz in the micro finance sector is p2p lending and borrowing. 

With interest rates, particularly for personal loans on a steep upward climb, is this the right time for peer to peer loan organizations to get going? 

Definitions first. Peer to peer lending is like borrowing from friends and family. The Internet enables the circle to expand beyond just friends and family. The premise is simple; get together a set of people willing to lend small amounts and a  set of those who need to borrow small amounts. Have them state their need and their ability to repay. Now have the investors bid for the business at a rate they specify. You need not bid for the whole amount that a borrower needs. You can bid to fund a part at a rate you specify. The lowest rate bids are combined to fund the borrower .

The lending company enables the transactions, does credit verifications and works as the actual intermediary.

This area is currently buzzing with activity.

kiva.org is active in the social sector and tries to do loans that change lives. Most of the loans are to small entrepreneurs in Africa and the site currently claims to do a loan every 14 seconds. 

YES-secure.com is active in UK.

While Prosper lets prospective borrowers define what interest rates they are willing to pay, Lending club assigns ratings and associated interest rates to loan requests.

Circle lending became Virgin money

Greennote.com and Fynanz.com focuses on student lending

and Wiseclerk.com is a forum for tracking and discussing various P2P lending organizations and operating on them.

That brings us to our question: Is the time ripe for P2P loan operations to start up in India?

My guess is that they would be classified as NBFC's (Non- Banking Financial Companies). The biggest challenge in starting up would be in getting and publishing  credit ratings. Would one or more banks be willing to back end P2P lending companies and provide them with not just funding, but also credit rating information?

Are you interested to be an early mover in this area?